10 Reasons We No Longer Need the Penny

The US one cent piece, or the penny as it’s more commonly known, is due to be dropped from circulation in the year 2020. This marks the end of many years of debate within the United States government over whether to continue to use the coin. Consumers and merchants alike have rallied on both sides of the issue â€“ after all, the penny has been a staple part of currency exchange since its introduction in 1787. It was created by our Country’s founding fathers, specifically Franklin and Jefferson, to help establish a stable currency for the Republic.

So, why eliminate this 200-year old icon when there are still so many things you can do with the penny? In the final analysis, the reasons not to continue to mint it outnumber those to keep it in production. Consider the rationale below and perhaps the decision will make sense.

You Can’t Buy Anything for a Penny

For a century or so after its origin, the one-cent piece carried significant value. Believe it or not, there used to be such a thing as “3 for a penny”. Penny candy was common until sugar rationing during WWII drove prices up. In today’s marketplace, you’d have to do an exhaustive search to find anything with a one-cent price tag and you’d probably be disappointed. So-called one cent sales are more conceptual than factual and based on “Buy one, get the second one for a penny”. Gone are the days when a child could lay a penny on the counter and pick out treats until it was spent.

Minting Pennies Costs Taxpayers Money

Note that I didn’t use the old standby: “It costs more to manufacture than it’s worth.” While that statement is true (it costs more than 1.7 cents to make one), coins are recirculated in spending, so any coin is likely to be used thousands of times over. That makes the manufacturing cost a moot point. However, as the value of a penny has decreased over the years, so has its circulation. If the coin isn’t being used in the US economy, it makes sense to save government and taxpayer dollars by eliminating the cost of producing it.

Plastic Is Replacing Copper (and Silver, and Paper)

Watch a checkout line today and you’ll see more people reach for their debit cards than for actual currency. It’s faster, easier to track and less messy. It also costs less for the merchant to pay the fees to process a card transaction than the man-hours required to handle cash in the store and carry cash deposits to the bank. So, along with other hard currency, swapping pennies over the counter is inefficient.

Pennies Are Already Dropping out of Circulation

By the same token as the points above, one cent coins are quickly becoming stockpiled in banks and in the homes of consumers, simply because they’re no longer useful. Most people would rather hand a store clerk only bills for a purchase, rather than count out change. That means the clerk is going to hand you more pennies as change. This cycle repeats itself and pennies simply build up. Check your piggy bank. What’s the most common coin in it?

Eliminating One-Cent Increments Encourages More Realistic Pricing

While it’s hard to pinpoint exactly when retail prices went from amounts like $250.00 to $249.99, it’s not difficult to understand that it’s a gimmick. Obviously, the $249.99 price is better, right? Sure, but if you save one penny on a transaction each day for a year, you’ve gained a whopping $3.65. Taking the penny out of the economic picture will result in a little more honest approach to retail pricing.

It Will Increase in Value

Historically, dropping any minted coin out of circulation immediately increases its value as a collectible. So, in 2020, all those pennies laying around the house will be worth more, and will continue to gain value as time passes. Many collectors are already starting to hoard pennies, taking more out of circulation.

We’ll Conserve Natural Resources

We’re more aware today than ever that the minerals we mine aren’t going to last forever. Ceasing production of pennies will lower our consumption of copper and zinc, as well as the fuel and energy required to mine and process it.

Nobody Misses the Halfpenny

These days, very few individuals realize that the US once had a half-cent coin. That’s because it was taken out of circulation in 1857. Given that phasing out this denomination had virtually no impact on commerce, there’s no reason to think that dropping the penny will have any serious side effects.

Other Countries Have Successfully Done without Theirs

Many other countries have eliminated several small denominations from their currency with no major impact on commerce. New Zealand, for instance, dropped their one and two-cent coins over 20 years ago. They have, since then, eliminated their nickel as well.

It Could be a First Step toward a “Cashless” Commerce System

Individuals with great foresight have long predicted that future societies would discontinue the use of currency altogether. Money would be replaced with a system of credits, thus eliminating any need for an exchange medium. Students of this concept support the idea as a valid way to establish fair trade.

In the final analysis, the penny has served the US faithfully for more than 200 years, but today it has outlived it usefulness. It makes sense to retire it with dignity and collect it for posterity and no longer have to face the dilemma, “Is it worth picking up a penny from the ground?“.

As a numismatic researcher-writer I have, for more than a decade, studied the usefulness of future coins. Denominations have changed over the years and centuries since mankind has enjoyed the utility of coins â€“ since 640 B.C. Denominations have been created, when needed, and abolished when not.

Today we face the elimination of the cent, for the ten reasons mentioned in this article. I have saved articles on this subject, mostly editorials by writers who felt strongly enough to comment in print. The mood has reversed dramatically in that decade from about sixty percent to retain the cent, to currently more than eighty-five percent to abolish.

This change of opinion has been influenced by the rising cost of manufacturing cents â€“ now costing 2.4 cents for each one cent coin minted â€“ plus the fact that the purchasing power of one cent has diminished so low that most people consider pennies a nuisance.

Dana O. Crandellâ€™s article is the best I have observed in my decade of studying the subject. The ten reasons mentioned should be carved in stone and sent to every legislator who must make a Congressional decision. They need to make these ten reasons their commandments.

As society advances, prices rise gradually. A loaf of bread is no longer a dime, and a workman receives more than a dollar a day for his labors, prices evident in Americaâ€™s past. Also in that past we had a half-cent coin. It was abolished when its purchasing power was next to nil in 1857 (and the cost of its copper increased). Today, 150 years later, the American cent is in that same situation.

A useless coin, but what to do with over 400 billion cents in circulation? Chicago Federal Reserve Bank chief economist Francois Velde offered the best solution â€“ call them nickels by revaluing them to five cents (he called that â€œrebasingâ€) â€“ and let them stay in circulation.

Since the nickel coin faces the same indignity, my suggestion was to revalue both the cent and nickel to the next highest denomination. A Texas millionaire heard that and squirreled away 20 million nickels in a Dallas warehouse (a million dollars worth!) in hopes of doubling his investment.

I see a future where we will always need coins â€“ bless the vending machine industry which thrives on coins (and hates changing paper money into coins). Further, of the five coin denominations we currently have circulating today, only the dime and 50-cent coin will survive. New coins of $1, $2 and $5 will replace those abolished to provide an adequate circulating medium in a revised coinage system.

Prices will be rounded off – if not for individual items â€“ at least the price at the cash register(the “transaction price” or what the Canadians call the â€œtally priceâ€). Rounding off to multiples of 10 cents will balance out in the end for both buyer and seller. And society advances by not being bothered by low value coins.

And perhaps 50, or 150 years from now, the dime will have to be abolished. Meanwhile thank you Dana Crandall. You said it better than I could, as well as 199 editorial writers. We have all come to the same conclusion.

Though I agree the penny may not be the most useful coin from a currency standpoint (aside from accounting practices), it is a great long-term hedge against inflation. The metal in a coin means there is a base-value to the coin (the coin will always be worth its metal value and face value). A paper bill is worth the paper it is made from, which will not be more than its face value.

In fact, one could easily make the argument that a coin made of metal is a much more practical and realistic form of wealth than paper money or 1s and 0s in an online bank account.

The best historical example is gold and silver coins. Due to inflation and rises in commodity pricing, these coins are vastly more valuable than their face value based on their metal value.

The up-and-coming metal value star in the coin world would actually be the penny. Specifically, the copper penny. It is worth more than 2.5x its face and sells by the pound or ton to copper penny investors throughout the United States. People invest by the pound or ton.

The second up-and-coming metal value star would be the copper nickel. It’s face value is five cents, so it costs 5x more to obtain. But the metal value (75% copper and 25% nickel) makes it also worth more than its face value.

So is it worth picking a penny off the ground? I certainly believe it is. After all, that copper penny is a sought-after commodity. And if it’s a newer zinc penny, just wait it out. After all, a combination of quantitative easing, inflation, and global metal demands should boost the value of zinc as well.

The penny and nickel just add drag to commerce. Canada is dropping the penny and transactions will be rounded to the nearest 5 cents. We should take that one step further and drop the nickel too. Thus on only coinage needed would be the dime, half dollar and dollar. With all that room in the cash registers would finally have room the dollar coin useable.

I actually like receiving change whether it is a penny or a quarter. I save change all year until yard sale season and that is my ‘spending’ money! Amazing what you can buy for five pennies sometimes!!!

In Greece in the 1960’s, besides drachmas they had smaller coins called leptas. These aluminum coins were worth less than a penny, and later they got rid of thm completely. Good riddance. I hope pennies go away too; there’s no reason why producers can’t round off their prices– especially when they’ll probably round everything up!